BUDAPEST/WARSAW: Polish stocks lagged a rebound in some European equities markets on Tuesday ahead of a government meeting with bank executives to thrash out recent fee increases.
The ruling Law and Justice (PiS) party which rules since November has warned that banks could act illegally if they pass on the cost of a planned tax to customers.
A rise in the burden on Polish banks has pushed down the index of Warsaw-listed bank shares by more than 20 percent since October.
Polish shares failed to track a rebound of European stocks from a plunge on Monday and early Tuesday, mainly caused by concerns over the health of European banks.
Poland's bluechip stock index fell 0.8 percent by 0931 GMT.
It was led partly by a 1 percent fall in state-controlled PKO BP, which said it expects to pay around 812 million zlotys ($204 million) in the new bank asset tax this year.
Bank stocks in Poland and the region, however, withstood the earlier plunge in Western peers.
"The difference is that Polish banks do not have CoCo bonds (contingent convertible capital instrument), which caused the trouble in Deutsche Bank shares," said Monika Kiss, analyst at Budapest-based Equilor.
Oil funds, in trouble due to the recent decline in oil prices, have European bank stocks that they can sell now, but probably they do not have Central European bank shares in their portfolios, the analyst added.
Despite the concerns over the increased tax burdens on banks, the second-biggest Polish lender, Bank Pekao, reported that profit fell less than expected in the fourth quarter of last year, and proposed a dividend payout.
The bank's shares rose 0.8 percent.
Central European stocks and currencies were mixed and initial losses in government bonds narrowed.
Markets have calmed down, but the biggest fall in Japanese shares in three years is a warning that concern over the state of the global economy could continue to weigh on sentiment in the world and the region, traders said.
"Polish bonds, for example, tracked Bunds early yesterday, but then bond investors in the region have found it more realistic to track the yield rise in (the riskier) euro zone peripheries," one Budapest-based fixed income trader said.
"The renewed market fall in Japan indicate that investors are losing their faith that monetary easing by central banks can be efficient, and a negative interest rate race will not do any good to European banks," the trader added.
The yield on Hungarian 10-year bonds rose 9 basis points to 3.5 percent. Poland's corresponding yield rose by only one basis point, to 3.144 percent, a 290 basis point spread over German peers.
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